Wholesale Milk Prices and Big Ag

[Szdfan]

http://www.mennodiscuss.com/viewtopic.p ... 30#p343480

Thought experiment:

The dairy farmers in your area ask you to take over the local dairy coop, imposing whatever structure you want. Several of the local farmers are in your local congregation, but most are not Menno, and some are not even Christian.

How would you set it up, and why? How would decisions be made? How would profits be distributed - or do you simply keep all the coop's profits for yourself, and ask the farmers to be content with the price you pay them for their milk?

This response is strictly related to the dairy co-ops. If I started dairying today, a co-op would be the last thing I would join. I have watched all of them across America and in my opinion are no longer true co-ops. With CEOs earning huge salaries and watching heavy handed decisions made that has not benefited the little dairyman, I would reject them. WE still have a half dozen private owned enterprises who were able to stave off the threats of co-ops trying to overcome them by maintaining a strong financial position. Everyone of these private enterprises pays better prices to their producers and they have a waiting list from dairymen in the co-ops who would like top get out under the hands of the co-op bosses. I work for a dairy equipment company and my recommendation to a young dairyman starting up is to search diligently for a private milk processor if he can find one.

In 2009 or so, I started hearing that wholesale milk prices were so low that many independent dairies were struggling to make ends meet. My understanding was that prices were being driven down by large, consolidated corporations who had the purchasing power to dictate the price of milk and it was starting to seriously hurt the farmers. The reason that I learned of this in 2009 was because a seminary friend of mine grew up on a dairy farm and the Obama justice department had announced that they were looking into anti-trust action to break up "Big Agriculture" monopolies.

I haven't heard anything about this story since then. What's the current status? Since moving to a rural area, I've become more aware of the tenuous financial situation that many farmers face. For example -- the Listeria outbreak last summer with Rocky Ford/ SE Colorado cantaloupe will likely cause some farmers to lose their farms.

[appleman2006]

Remember this. No one can produce anything at a loss indefinitely. Eventually large dairies that do not pay a fair return will run out of suppliers. This fact of course does not help the struggling farmer that right now is dealing in a commodity where there is an over supply.

My question to you as a group is this? Do you shop for food at the places that you can get it the cheapest? Because if you do you are part of the problem. Possibly the only reason that product is cheaper is because they are taking advantage of the farmer they are buying it from. Or if you are dealing directly with a farmer perhaps it means he is paying his workers less or perhaps he is afraid to charge the price he really should have because he thinks you will desert him as a customer.

[sullymusic]

Appleman - how do we remedy that dichotomy? You know our Anabaptist mantra is buy as cheap as you possibly can. trying to get a Mennonite to pay more than he has to is like trying to teach a centipede to jump rope. The only answer is we have a free enterprise system, I guess.

To SZDfan - I havent followed that lately but it's true a couple large cheese companies were playing games with the market. There was some anti trust suits and things are high now the last year but even through that bad stretch the small independent companies had no problem. None were sold out to large co-ops like small banks have been doing. If things hadn't straightened out, there would be no dairymen left or us milking equipment companies.

[jcm]

I think that the ag and the manufacturing industries have the same basic challenges right now. There is a lot of willingness to produce but little willingness to change. Way to many people want nothing to do with marketing their product which has lead us to the huge disconnect from, yet total reliance on, the executive and regulatory elite.

Before we can deal with that problem we need to get over the mentality that bigger is better and be willing to take a risk on our own though the aforementioned elite are rapidly making that illegal. Ever hear of a raw milk raid?

[barbara10]

Remember this. No one can produce anything at a loss indefinitely. Eventually large dairies that do not pay a fair return will run out of suppliers. This fact of course does not help the struggling farmer that right now is dealing in a commodity where there is an over supply.

My question to you as a group is this? Do you shop for food at the places that you can get it the cheapest? Because if you do you are part of the problem. Possibly the only reason that product is cheaper is because they are taking advantage of the farmer they are buying it from. Or if you are dealing directly with a farmer perhaps it means he is paying his workers less or perhaps he is afraid to charge the price he really should have because he thinks you will desert him as a customer.

I don't know about milk, but with a number of agricultural products, the farmers make the same as they did 20 years ago, but the consumer pays more in the store.

And if you pay more, it doesn't necessarily mean that the farmer gets more of the proceeds.

Farmers need a way to sell directly to the public, bypassing the big stores. Maybe local farmers could band together and sell their milk at the farmers market out of a refrigerated truck. I don't know the economics of milk, but with many other products, farmers make more at Farmers Markets than selling elsewhere.

[barbara10]

Remember this. No one can produce anything at a loss indefinitely. Eventually large dairies that do not pay a fair return will run out of suppliers. This fact of course does not help the struggling farmer that right now is dealing in a commodity where there is an over supply.

My question to you as a group is this? Do you shop for food at the places that you can get it the cheapest? Because if you do you are part of the problem. Possibly the only reason that product is cheaper is because they are taking advantage of the farmer they are buying it from. Or if you are dealing directly with a farmer perhaps it means he is paying his workers less or perhaps he is afraid to charge the price he really should have because he thinks you will desert him as a customer.

I don't know about milk, but with a number of agricultural products, the farmers make the same as they did 20 years ago, but the consumer pays more in the store.

And if you pay more, it doesn't necessarily mean that the farmer gets more of the proceeds.

Farmers need a way to sell directly to the public, bypassing the big stores. Maybe local farmers could band together and sell their milk at the farmers market out of a refrigerated truck. I don't know the economics of milk, but with many other products, farmers make more at Farmers Markets than selling elsewhere.

[Szdfan]

Remember this. No one can produce anything at a loss indefinitely. Eventually large dairies that do not pay a fair return will run out of suppliers. This fact of course does not help the struggling farmer that right now is dealing in a commodity where there is an over supply.

My question to you as a group is this? Do you shop for food at the places that you can get it the cheapest? Because if you do you are part of the problem. Possibly the only reason that product is cheaper is because they are taking advantage of the farmer they are buying it from. Or if you are dealing directly with a farmer perhaps it means he is paying his workers less or perhaps he is afraid to charge the price he really should have because he thinks you will desert him as a customer.

My family has been in this gradual journey of changing our eating habits and where and how we buy our food. We're not perfect and we're not fundamentalists, but we see this a gradual process. We are trying to eat more whole foods instead of processed foods. We're buying organic milk. At some point, we want to make our own cheese. This past summer was the first summer we had a vegetable plot in the community garden. This past year was the first year we canned.

The issue here is industrial agriculture. Big Agriculture is very efficient at producing vast quantities of food, but it's impossible to produce quality food at those quantities and so they take shortcuts and make decisions that impact the quality and healthfulness of the food. Thanks to farm subsidies (like corn and soy), we have some of the cheapest food in the world. But what are the health costs and environmental costs of cheap food that is shipped vast distances? What is the cost of cheap food to local, independent farmers who are unable to compete price wise with industrial agriculture?

Most processed food is not good for you, since it often contains large amounts of high fructose corn syrup and other unpronounceable chemicals and food additives in order to prolong shelf life. High fructose corn syrup is a cheap sweetener made cheaper by governmental subsidies and it feels like it's in almost everything -- from soda to peanut butter to white bread. Despite recent commercials from the corn lobby, high fructose corn syrup is not the same as regular sugar and is a major cause in the current obesity epidemic in America.

For us, it's become important for us to know where our food comes from and we are willing to pay more to have that kind of control. Over the past couple of years, there have been a number of recalls of peanut butter (and our daughter eats a lot of peanut butter). We've not been effected because we buy organic peanut butter without any additives in it.

In some ways, we are learning to eat like my grandparents did --

• Mostly eat what's in season
• Try to purchase from local farmers
• Can and freeze food for later instead of depending on the grocery store
• Eat foods made from whole (not processed) ingredients
• Buy local, ethically raised meat. Feed lots and other industrialized meat sources often have terrible conditions in which the producer attempts to fatten up the animal as fast as possible. Therefore, they give cows corn feed which they can't digest (cause it's cheap) and pump them full of antibiotics in order to prevent disease. There's a feed lot in the next town from us and it's a miserable place that stinks like death and excrement whenever we drive by it. But ultimately, the reason we buy free range, grass feed beef is because it tastes better -- happy animals make tasty animals. The cost of the meat we buy is substantial, but we've also made the decision to not eat as much meat and so it balances out.

It's been a challenge to keep these commitments. Ironically, we had better access to local, organic food in Baltimore because of the farmers markets. Out here, it's mostly large-scale farming, but there are vegetable stands in the summer. SE Colorado is a dry climate, and so it's harder to grow some kinds of vegetables out here.

So we've made some compromises and practical decisions --

• "Local" for us means regional (CO and NM). This area grows watermelon and cantaloupe, but for some other kinds of fruits (like peaches) we have to buy fruit trucked in from the western slopes. We'd like something more local, but at least it's not California or Peru or India.
• We are willing to drive a certain amount of distance to purchase bulk quantities of food and then can them. Last fall, we drove two hours to Canon City and picked 125 lbs of apples that got turned into apple sauce and apple butter. (My wife uses apple sauce as a sugar substitute in baking).
• There are no local dairies in southeastern Colorado -- so we buy from an organic milk brand that sources throughout this part of the country -- i.e. Colorado, Utah, Idaho, etc. Not perfect, but better than the alternatives.
• We are giving ourselves lots of grace here -- we do go to the grocery store for some things (there will never ever be a local or regional source for cranberries) and we occasionally buy fast food (though we try to bring our own food on trips). It's not about being perfect, it's about doing the things that we can do.
• We are trying new things. Next year, we're going to plant some heirloom vegetables and my wife would like to raise a few chickens (but that has to be negotiated with the landlord).

I think the key to success here is to do the things you can do with what you can afford. If you have to make choices because of cost, buy organic milk and free range eggs. Go to your local farmer's market. Develop relationships with the farmers there. Know where your food comes from -- the more local your food, the less likely you are to get sick from it. We need food safety rules because of industrialized agriculture; it's not the same dynamic if you buy local.

And if you buy organic food from the grocery store, try to do some research. The problem with organic certification is that 1) the certification process is so expensive that many small producers can't afford it and 2) the food lobbies have managed to water down the certification requirements. Organic is better than non-organic, but what you're buying may not be as organic as you think it is.

Oh...and organic processed food is still processed food. Just because those chocolate chip cookies are "organic," doesn't mean that they're good for you.

[Szdfan]

This article by Francis Lam in Salon had a major impact on our thinking about these issues. Lam makes the pledge not to buy "cheap chicken" during 2011.

A year ago today I had the honor of meeting Charles Gabriel, a master fryer of chicken. He’s a legend among New York food dorks, his bird adored the way tweens coo for Justin Beiber’s hair. I met him while he was making banana pudding, and he welcomed me into his Harlem kitchen, a cramped room with so much oil vapor it stung my eyes. He showed me his frying pans, big as sleds — dwarfing his massive hands — and black with the ghosts of chickens past. He showed me how he fries chicken, but more importantly, as we spent the afternoon together, he told me why. He told me about moving up to New York from North Carolina 45 years ago, as a teenager, and how he found work cooking because it was what he could do, what he learned from his family of southern sharecroppers. He told me about how making his momma’s chicken is what he loves best, how it just feels natural to him as he smiled his big smile and slipped pieces 36 and 37 of this batch into his roiling pans.

I thought about the decades Mr. Charles has spent doing this, how much of that eye-stinging oil vapor he keeps in his lungs, how a man can spend an entire lifetime in hard work because it makes him feel at home when he has left his home. I did some math: X pieces of chicken a day, Y days a year, Z years, and I came to realize that he has fried something on the order of 5 million pieces of chicken. And precious few, I would wager, of those chickens were raised in a way sustainable food gurus would be happy about.

So this, then, is my omnivore’s dilemma: Which is more important to me? To stop having my money support chicken that is mass-produced at unbelievable scale, poisoning the earth and water for hundreds of miles, that is treated brutally, that goes through a disassembly line so fast and furious that it injures 1 out of every 3 poorly paid workers who works on it? Or to keep supporting Mr. Charles, to share in his chicken, to know what his work means to him? To have that chance to meet the many Charles Gabriels, the taco truck cooks and the noodle shop owners and all the other working-class cooks whose cuisines I adore and whose stories I want to hear and help tell?

For starters, for my home, I will only buy chicken that is well raised, so that I will support the people doing that work. I will ask where the chicken came from, I will read up on farming practices. It’s possible that I may have to cross the cheap chicken line at some point for the sake of some personal or cultural connection. But to negotiate the ambiguity judiciously is part of this challenge: How will I figure out which exceptions would be justified, and which would be exploiting a loophole because of a drooling “I want”? (And isn’t “But I want” the phrase that has the power to ruin all good-intentioned resolutions?)

I’m still working on the answer to that, but I think that nebulousness is actually at the heart of this challenge: to learn to make my eating choices deliberately, consciously. Because what does “cheap” mean but for something to not be valued? Price is supposed to be a reflection of that, not a determination. And what I’m saying is: I want to not ever take my food for granted. I want to earn my food by valuing it.

[anabaptistenigma]

I have an interest in locavore as well. I am less convinced of the organic route, but there may be merit, I just haven't studied it very much. But of course I'm interested in buying frugally...so the battle rages for which concern wins the day.

Milk wins, we can get local farmers milk for 2.00 a gallon. Eggs win, we raise our own and produce enough to even supply another family. I really don't worry about the chicken's feed. I doubt it is organic, but it is mixed by a mill less than two miles away.

We have an Amish dairy about five miles from here who produce milk, skim cream, make cheese, and yogart all in small kitchen batches but they have it to sell. I went there this fall, and they have a neat little set up. There is a small building you go into that has a fridge and a place to self pay. They also sell grass fed beef. But the prices they were asking for their product was jaw dropping. I had gone in there with full intention of buying product, but I left again without buying a thing. Frugality won that round.

What I wish could happen and maybe this is a fanciful idea, but I would love to see a network of those of us who live in different states who have local products that you know where they come from, and may even be a good deal, could trade those products. For example, an area that has orchards where you can by drops or seconds cheaply would trade with someone who can get local strawberries or blueberries at a good price. Or if you are from a place where you know cheese is produced and you can get it cheaply you could trade for oranges from somewhere else. I know shipping would become a problem, so even just having knowledge about where products are would be helpful. Sometimes you could plan trips or vacations to places around a certain time of year, or you may know someone who is traveling to a certain place and you could pay them a little to pick up some of a known local product....That's just some ideas I've thought of.

i do some of that now. My sister in law came from Iowa yesterday. She has access to cheese that she can get for around 2.50 a pound. She brought me 30 lbs of cheese. I intend shred or slice it and vacuum pack it. I haven't decided yet if I should freeze it or not. maybe some of you hve an opinion on that...But that much cheese should last a while.

[Szdfan]

$2.00 a gallon for milk?? Nice.

We don't eat 100% organic, but we do try to buy organic products from the supermarket. The main reason is that we are trying to avoid pesticides and growth hormones (like in milk), but local takes precedence over organic. Also, organic food doesn't (shouldn't) have genetically modified vegetables and animals. Whole Foods recently started selling genetically modified corn, but doesn't have to label it as such.

I like your idea about trading, but I agree that shipping might be an issue.

The locavore movement is one of those things that seems to transcend political ideology and might be one of those intersections between certain liberals and conservatives.

[jcm]

Almost all of the sweetcorn we grow is GMO because it drastically reduces our carbon and chemical dependence. There is also anecdotal evidence that it improves the population of some beneficial insects. I guess that I feel that I have chosen the lesser of two evils.

I wonder whether the "locavore/organic" movements are as much common ground as they are a crossing of paths. I sincerely doubt that SZD would agree with us libertarians on our core motivations and goals.

[appleman2006]

SZD sounds like you have done a lot of thinking about what food you eat and I applaud you for that. I would disagree with you on the idea that organic is better. Read both sides of that issue and you will find that science simply does not back that up. And quite frankly certification does matter. I would be very suspicious of any grower that uses the excuse that they cannot afford to be certified. It also of course depends a lot on what the certifying body is. The western USA certification process based on what they allow is simply not even close to what most people would think of as being organic.

And yes JCM, based on what I know, I would buy your GMO sweet corn before other corn any day. It is certainly more environmentally friendly to do so and safer IMO

But getting back to the point of this thread. There have been a number of posts that have already illustrated the root of the problem. I want to be careful here because if you are truly in a situation where you have to pinch your pennies in every area you should not feel guilty for pinching in food as well. However it disgusts me that Mennonites of all people are often so very cheap when it comes to food. Especially when they themselves are farmers. And it is no wonder to me that they then have trouble themselves selling it at a price that they can make money on it.

Remember folks. No apple farmer is going to make a living selling culls or grounders. The only reason he even has those available is because he is making money selling good apples . The culls are simply a byproduct and in most cases the selling of them barely covers expenses. If that was all he had to sell he would be out of business in no time. .

Someone made the comment that food costs are growing but the farmer is not getting more. In Ontario we had a 28% increase in minimum wage over a three year period. On top of that energy costs have gone through the roof. And often it is the the grower who takes the brunt of that. But again I say that that will only happen for a time. Eventually when farmers stop making money they stop producing.

As to the farmers market thing. True there is money to be made at retail but if you are a struggling farmer that is looking at the green grass on the other side of the fence, be careful. Just like making jam, retail can be added value but it is only added value if you pay yourself to do it. Retail costs money and if you are the type that is afraid to charge what you need to pay yourself a fair wage don't even start. Within a few years you will be totally discouraged.

[mikef]

As to the farmers market thing. True there is money to be made at retail but if you are a struggling farmer that is looking at the green grass on the other side of the fence, be careful. Just like making jam, retail can be added value but it is only added value if you pay yourself to do it. Retail costs money and if you are the type that is afraid to charge what you need to pay yourself a fair wage don't even start. Within a few years you will be totally discouraged.

Good advice. Often the people who have what it takes to succeed as growers or manufacturers are not as aware of what it takes to succeed as a retailer. As a retailer myself I'm not sure if I know what it takes to succeed. There is no question that the margins are much smaller than manufacturing and probably also growing wholesale produce.

But there are a few produce growers I know who have succeeded well as retailers and I think they have an enviable business model. One in particular that I know of sold produce through wholesale auctions for years, but was able to build up a retail business at his farm to the point where he no longer needed to grow wholesale in order to make it. Retailing product that you grow or manufacture can be a wonderfully efficient business, and a great family operation. It may be a rare person who can get it done but they are out there.

[appleman2006]

I agree Mike. My only advice is to not give up the day job right off the top. It can take years to build up a successful retail business. And again I emphasize. You must not be afraid to charge a good price for product.

[anabaptistenigma]

I am currently reading an excellent book, Animal, Vegetable, Miracle: A Year of Food Life by Barbara Kingsolver. It is my very first introduction to a complete argument for local, sustainable food. I have to say it is informative, engaging and laugh-out-loud funny. While I'm not sure about all of the author's ideas, it is certainly challenging my concepts of good food and the quality vs. cost of food.

Give yourself a treat and check it out at your local library.